Vat

oxocubes

Recently been advised by accountant to charge vat as my turnover will be above £60K but below £150K. Because of this I can Claim back 12% of the turnover plus vat.
I'll use some figures to make my point clearer.
I turnover £60k + vat (10500) = 70500. I then pay 12% of 70500 = 8460 to the vat man, leaving me a profit of 10500 - 8460 = 2040.
Seems good to me any comments most welcome.

cash99

This is called the falt rate scheme, and it is possible to make a profit from it, however the downside is that you cannot relcaim vat on any purchases you make.

If you vat inclusive purchases are low then this is ok if not then it costs you money.

At sales of £60k plus vat your vatable purchases / costs need to be less than (2040 / 0.175)= £11700 for you to be better off.

oxocubes

Thanks cash99. I should have mentioned I have very little reclaimable vat thats why he recommended it.

MarkyMarkD

This is fine if you have a business where your customers can recover the VAT, and hence don't care if you increase your charges by 17.5%.

If you are a small businessman supplying residential customers with plumbing/electrical/whatever services, the same certainly won't apply as the 17.5% is either an increase in the amount they bear, or a reduction in the net amount you can charge.

oxocubes

Good point Marky, but I work for large companies so seems a good deal.